Spend Analysis Pro Tip #3 – Sometimes More is Less

You’re probably familiar with the phrase less is more. When it comes to spend analysis, that old cliche most definitely applies.

Throughout a spend analysis, it’s often tempting to take a deep dive into highly-granular spend data. Many expensive platforms exacerbate the issue. They bombard Procurement teams with a level of detail that’s certainly nice to have, but mostly just distracts from the real work of cost reduction initiatives. Kicking off a strategic sourcing campaign rarely requires more than a few essential data points.

Think of spend analysis as a map. The details it provides should help you get from Point A (your current spend profile) to Point B (savings) as easily as possible. Attempting to make this journey using an excessively detailed report is a lot like trying to drive cross-country with a topographical map. When all you’re trying to do is get to California in one piece, it’s not all that important to know your elevation.

There’s a time and a place for highly detailed spend analyses. Once you’ve identified a clear path toward savings, your Procurement team can take a look at whatever details it pleases. Just remember, granular analysis without an established strategy will only lead to wasted time and missed opportunities.